LG,
You point out that the VGY topped 4/98. Not surprisingly, 4/98 marked the top for the A/D line and for the Russell 2000.
I have previously mentioned the interesting observation that A/D line tops are reached at the end of EW 3 of 3, presumably the height of the uptrend momentum rather then at market tops. In the '87 crash the A/D was also on a down trend after topping in the spring of '86 - a year and a half in advance.
I agree that we are in the middle of a big down move. My EW read is that this down move is one degree larger then last year's mini crash. I expect the S&P to drop below 1140, and my guess is that the bottom should be around SPX 900.
My disagreement with you is semantic. I believe the market was not in a bear since '98, only since last July.
I guess minimal duration of this bear should be 6 months, but could be longer, as my EW count looks at it as a correction to the bull run 12/94 - 7/99.
The current correction should be a sharp zig zag, alternating with the 1994 flat correction.
My guess is steep decline to 1120-1140, then sharp recovery, then down again to a low in December.
If y2k bug would turn out to be benign (No major disruptions to the world's economy, let's say something in the order of a medium to big sized natural disaster) then I believe we'll see a giant relief rally from January.
I have no estimate on the next bull, but guess it would only see marginal new highs in the S&P.
The Millennium Crash will be the next down move, after the recovery from the current bear. In my count it is going to be at least Supercycle scale down move (previous down supercycle was the Big Depression), and should correct for the entire move 1933-2000. We could see nifty fifty stocks under their book value at the end of this major bear, and many companies wiped out. It should take 5-12 years to complete.
ATG |
